Insights from the 2018 Fintech Abu Dhabi Innovation Challenge
Abu Dhabi Global Market (ADGM) and KPMG came together in 2017 to launch the Fintech Abu Dhabi Innovation Challenge. The event aimed to enable start-ups to access industry-leading solutions to address emerging business challenges in the financial services industry, with 156 fintech companies from around the world shortlisted to address 15 problem statements. The 2018 event built on the success of the inaugural challenge and focused on technology adoption as the key to effective fintech. Matchi once again provided the entry mechanism and helped to assess and shortlist successful applicants and their solutions. We spoke to Umair Hameed, Partner for Financial Services at KPMG Lower Gulf, about the lessons and themes from the 2018 Fintech Abu Dhabi Innovation Challenge:
“Abu Dhabi Global Market (ADGM) is a financial free zone in Abu Dhabi seeking to become a fintech hub in the region,” Umair explains. Recognising that for fintech to be successful, adoption of the technology is critical, ADGM decided to evolve the challenge for its second year.
“We identified a number of corporate champions, including a bank, an airline, an investment company and a regulator,” Umair says. “The idea was to come up with the problem statement, use Matchi to find the fintechs and then to work with the fintechs to develop a prototype and present these to each corporate.”
Umair notes that the second iteration of the challenge has been ideal given the way the market has moved since 2017, and that the response was overwhelming. There was space for 400 people to attend the event, but 1,500 people arrived. “All in all, it was a success from every stakeholder’s perspective.”
For the fintechs selected for the programme, the benefits were substantial. “Most fintechs are start-ups,” says Umair. “That means they tend to be resource poor. They have great products, but they may not know how to get those products embedded into a client.”
KPMG essentially functioned in the business analyst role, creating a layer between the tech companies and the corporates. “We were able to help the fintechs to enhance and scale their products in a meaningful way,” Umair says.
Interestingly, Umair says that while initially they’d used the term “adoption” to refer to corporates needing to embrace new technologies, as the project progressed, they realised there was a need for adoption from both parties. “The corporates needed to be able to work with smaller firms, and the fintechs needed to get the corporates to embrace their products. This is something we don’t tend to think about, but it’s actually critical,” he says. “A firm like KPMG, that aims to bring neutrality and professionalism to the table, can help iron these things out.”
KPMG functions as an intermediary to help fintechs and corporates to understand one another and work together. From defining the problem so that everyone understands it in the same way, to curating viable fintech solutions through Matchi, to taking care of the administration involved in the process (whether that relates to procurement or translating tech or business speak for the other party).
Umair says that within this process, it’s important for fintechs to understand that their solution is likely to be a piece of the puzzle. Value chains will differ from one organisation to the next, and fintechs will need to fit their solution into the wider business. They also need to be aware of the potential layers of bureaucracy that may exist in larger corporate businesses, as well as the more formal culture. “We observed that some of the fintechs were a bit less formal and structured about presentations or taking feedback on board. They probably have to understand that they will need to be more professional in every aspect of their approach to work with larger entities,” he advises. “Yes, fintechs need corporates and corporates need them, but at the end of the day, fintechs need corporates more because they have the resources and the customers. These organisations need to take them seriously, give corporates what they’re looking for and be prepared to be flexible if they want their solutions to be adopted.”
On the other hand, Umair suggested that corporates also need to realise that there are reasons stopping them from harnessing the benefits of emerging tech on their own, so when dealing with fintechs, they need to come in with mutual reverence and be prepared to be flexible too, and recognise the value that the fintechs bring.
The value of a challenge like this is a triple win: fintechs get a fast-tracked audience with an interested corporate; corporates get access to a tailored list of potential solutions and providers; and all of this happens in a much shorter space of time than if corporates and fintechs had to find one another.